The Premium Chocolate Movement: Effecting Change With The Creation Of Value

02Oct

INTRODUCTIONThe term revolution has two meanings in English. It can signify an abrupt change in a system, such as a system of governance, production, or consumption, and it can also mean a full cycle, such as the turn of a wheel.

The chocolate industry, that is the cultivation, trade, production and consumption of chocolate, is undergoing a revolution. Premium chocolate producers are raising the quality standards of chocolate, and developing new trade links that offer cocoa producers an alternative to the extreme instability of the commodities market.

However, the cycles of capitalism threaten the sustainability of premium chocolate. As happened in the organics industry, large corporations could consume the smaller producers and apply the principles of industrialisation to drive the high price of premium chocolate down. The potential for premium chocolate to be a revolution of change, and not just another iteration of late capitalism, lies with chocolate connoisseurs.

Their appreciation for the artisan, and subsequent education of consumers, distinguishes premium chocolate from mass-produced chocolate by imbuing it with the value of authenticity. It is this value that may save premium chocolate and empower it to be a true agent of change within the cocoa industry.

THE CURRENT STATE OF CHOCOLATEMost of the chocolate sold in supermarkets today contains barely any cocoa at all. In the US, a chocolate bar need only be 10% cocoa in order to use the name, and what cocoa exists within these mass-produced bars is of the poorest quality.

The world’s insatiable desire for this sweet treat resulted in aromatic native varieties of Theobroma Cacao, such as Criollo, to be pulled out of the earth and replaced with Forastero. The beans from this plant are bitter and astringent, and lack thecomplex flavours of native species, but they have the advantage of being hardy and offering higher yields.

Large amounts of sugar, imitation vanilla and dairy products are used to mask the bitter taste of these beans. In the EU, up to 5% of the cocoa butter can be substituted with cheaper vegetable fats including palm oil, karate, illipe, sal, kokum and mango-kernel oil.

The cocoa butter that naturally constitutes approximately 55% of a cocoa bean can be sold for use in cosmetic products at a much higher price than it could be sold in a chocolate bar.

Essentially, everything is done in the production of a mass-produced chocolate bar to reduce its cost to the producer, and to the consumer.

cocoa tree in the rainforest Costa Rica (picture Nahua)

CENTRALISATION OF CHOCOLATE MANUFACTURING

This separation of chocolate production into two parts — first the manufacturing of semifinished cocoa products such as liquor, extracted cocoa butter and couverture, and second the manufacturing of chocolates for consumption — occurred as part of a rapid concentration of the chocolate industry which began shortly after World War II. The age of innovation and invention inspired by the Industrial Revolution ended, and was replaced by one of acquisition and merger.The Cadbury company bought J.S. Fry and Sons, and was itself merged with the soft drink giant Schweppes. Swiss giant Nestlé bought Italian brands including Perugina who make the popular chocolate Baci. Kraft acquired Terry’s when they bought United Biscuits, and merged it with a chocolate company they already owned called Suchards to create Terry’s Suchards.In addition to these chocolate companies consuming and absorbing smaller companies, international grain giants such as Archer Daniel Midlands (ADM) and Cargill entered the chocolate industry, corporations with enormous international shipping, storage and supply-chain infrastructure. By 2005 more than half of the world’s beans were transformed into chocolate by just four companies: ADM, Cargill, Barry Callebaut and Nestlé. This centralisation wrested control of the cocoa industry from the countries who produce it to the countries who consume it.

LIBERALISATION OF THE COCOA TRADE

It was the liberalisation of the cocoa industry in the 1980s and 1990s that provided the perfect conditions for the centralisation of chocolate manufacturing. As Carol Off notes, in her detailed account of exploitation of cocoa workers Bitter Chocolate, Investigating The Dark Side Of The World’s Most Seductive Sweet, the abolition of government subsidies in cocoa producing countries allowed heavily subsidised American companies to move in and create a monopoly, barring entry toindigenous companies. Geographer Niels Fold agrees that most local companies have been pushed out of the cocoa business. Those that survive do so as subsidiaries of the large multinationals, or they manage the transport of beans from plantation to port, from which point they hand them over to “exporters with international linkages and expertise.”

Prior to this restructuring of the global cocoa industry, marketing boards, and other organisations established by producing nations, protected farmers from the extreme price volatility of the commodities market. One way in which they offered protection was by restricting the export of cocoa to licensed companies or state controlled bodies. These government and semi-government agencies bought reserves of cocoa beans when the market price was low and stored them in order toreduce supply and lift prices. When the market price increased to extremely high levels, they sold the reserves in controlled batches to keep the price of cocoa from escalating beyond the purchasing abilities of cocoa buyers. The profits of these actions were put in a stabilisation fund which covered losses if the market price dropped too low, and were used to fund the organisations themselves.These bodies were dismantled as a condition of Foreign Aid, in the form of development loans from The World Bank and The International Monetary Fund (IMF). In order to secure a loan, countries were forced to remove all government intervention in a nation’s cocoa trade, including loans and subsidies. Called Structural Adjustment Programs (SAP), these neo-liberal economic measures aimed to cut the expense of the marketing boards and, supposedly, increase farmer profits by connecting growers directly with buyers.

The result of liberalisation was disastrous for farmers and consumers of chocolate alike, as both grower earnings and the quality of beans dropped dramatically. Filling the void of the state regulatory institutions were new businesses, large and small, who brokered deals, managed the supply chain and arranged the export of the beans. They demanded a quick turnaround, from harvest to export, cutting the time required to properly dry and ferment the beans, crucial steps tothe development of chocolate flavour. The quality premiums, previously paid in countries such as Ghana for high quality beans, disappeared under the pressure to get beans to market as quickly as possible.Additionally, farmers who were once protected from the extreme price fluctuations of the commodities market found themselves completely at their mercy. The United Nations Conference on Trade and Development (UNCTAD) declared that the ideology of liberalisation directly resulted in a free-fall in the price of cocoa, which it describes as one of the most volatile commodities in the world.

Fair Trade emerged in the late 1980s as a response to this crisis. The organisation currently offers cocoa growers a minimum price of USD$2000 per metric tonne13, or the current market prices, whichever is higher. This provides certified farmers with a safety net if the commodities price of cocoa should fall, however there is no guarantee that the Fair Trade premium on beans will make it into the hands of farmers. Fair Trade will only deal with co-operatives, and these organisations need to cover their costs, including the high cost of Fair Trade certification.Simultaneously, this practice works as a disincentive for quality. A farmer who invests time and money in careful cultivation of their cocoa trees, proper fermentation and clean drying practices, will find their higher-quality cocoa end up in a container along with cocoa from all of the plantations within the co-operative, and will be paid the same price for their beans, regardless of their quality.

picture: Nahua chocolate Costa Rica

next time: THE DRIVE FOR QUALITY: THE PREMIUM CHOCOLATE MOVEMENT

Thanks to a friend Susan Hoban who shared this Final Thesis: Master of Food Culture and Communication